European Commission, Berec and broadband: behind the happy family picture

Berec, the European agency of communications regulators, today announced its intention to delay the adoption of an opinion on the proposal of Commissioner Kroes to strongly reform European network access regulation (via a well-known proposal of recommmendation). After 2 days of Conclave in Slovenia, the national regulators only found an agreement about an executory summary and then postponed the adoption of the final opinion by 2 weeks. A press release was published only today.

Commissione Kroes also published a statement, thanking Berec for the “positive opinion” (although no opinion has been drafted yet!).

It is not a surprise that Berec is supporting the general principles pursued by Commissioner Kroes with her proposed recommendation, because such objectives are non-controversial and are part of the acquis communautaire: enhancing of broadband investment environment across Europe, continuing to promote competition, ensuring a transparent, predictable, and stable regulatory environment in support of the roll out of NGA networks. No doubt that Berec and everybody in the market agrees on this.

However, beside such (non controversial) objectives, the innovative part of the Kroes recommendation lies in details which are susceptible to dramatically alter the current regulatory framework (enacted in 2009 with Commissioner Reding). In this respect, the press release suggests that Berec is seeking important changes to the draft recommendation in several and substantial areas, such as the outcome of the proportionality test in the matter of non-discrimination; the conditions for removal of cost-orientation; the principles of the proposed margin squeeze test and the cost modelling approach put forward by the Commission.

With regard to the most controversial part of the proposed recommendation, namely the proposal to “freeze” (save indexation) the price of access to traditional telephony networks (copper legacy networks), Berec clearly intends to defend the discretionary powers of its members:

“BEREC supports the Commission’s aim of achieving predictable and stable copper prices in line with the principle of cost orientation, which will help encourage efficient investment in NGA and provide a competitive safeguard to third-party access seekers. BEREC and the Commission agree that the modelling approach used by an NRA should reflect, among other things, the network architecture being pursued, which in turn would generate prices that reflect the actual costs faced by operators in each market”.

TRANSLATION: “Dear Commissioner, no way that you impose us to set the same price from Lisbon to Bucarest, passing by Bonn and Palermo. The copper access prices should reflect national market and competition conditions (network architetture, costs ecc) and therefore we can’t accept a Eurotariff. This is not roaming!”.

That’s the situation. European Commission and Berec have officially shaken their hands, taken a beautiful family picture and shown to be happy in front of the cameras. However, it is likely that the final outcome of this story (i.e. the final opinion of Berec) will be a bit less positive than Commissioner Kroes intends, and the national regulators may pretend substantial changes. Kroes seems to be ready for some concessions but, firstly, she expects a generic supports from Berec in the official venues. Berec prefers to avoid open conflicts also because the positions amongst members are diffentiated. Therefore, a peaceful official picture is in the interest of everybody. However, the agreement on the Kroes’s proposal (meaning the substantial details, not the incontroversial generic principles) is still to come.